Gender pay gap reporting requirements puts equality in the spotlight

A transparency initiative on the gender pay gap has led to reporting requirements being put into force from 5 April 2017. Private and voluntary sector employers in the UK with over 250 employees must now calculate and publish their gender pay gap information by April 2018.

Employers are required to publish their median gender pay gap figures (the median average) and mean gender pay gap figures (including low and high earners), as well as publish their proportion of men and women in the pay structure, and bonuses paid. It is also encouraged that they publish their action plan along with the figures to demonstrate how they intend to close the pay gap. The Government Equalities Office has since launched a gender pay gap website for employers to publish their pay gap information as well as to access resources and case studies on the subject.

Jon Terry, partner at PwC, said: “Gender pay reporting should be used by organisations as a catalyst to put actions in place. It is important that businesses not only report their numbers but are open about areas for improvement and the action they’re taking. This transparency will be received positively by customers, investors and regulators who increasingly see it as a benchmark of the wider culture within a firm.”

The UK is one of the first countries to introduce gender pay gap reporting and the regulation covers approximately 9,000 employers with over 15 million employees, representing nearly half of the UK’s workforce. The UK gender pay gap is currently at a low 18.1% and eliminating work-related gender gaps could add £150 billion to the annual GDP by 2025, according to the government.

However, the Office for National Statistics reported that although the median gender pay gap for full time employees has narrowed over the past 20 years from 27.5% to 9.4%, men still have a pay advantage over women.

Carolyn Brown, head of RSM’s client legal services practice said: “There are currently no formal penalties for non-compliance or for publishing inaccurate information. In addition, the published data won’t be sufficient to paint an accurate picture of whether there is an imbalance in pay for doing exactly the same jobs. What these rules will do is impose a reputational risk on those businesses that either fail to report or fail to adequately explain any gender pay gap.”

Sarah Churchman, head of diversity at PwC, said: “Simply reporting numbers won’t change things. This is the opportunity for organisations to understand what’s happening in their business and to take bold actions.”

A PwC survey of over 130 businesses showed that over 80% plan to provide additional narrative and context alongside their numbers and around a third will disclose additional data beyond the requirements.

Ed Stacey, head of employment law at PwC, added: “The gender pay regulations are complex and many employers will face challenges interpreting them, preparing the data required and evaluating their results. All of this takes time and the impact from the regulations is likely to be felt quite acutely by those businesses which have not spent time addressing their pay gaps until now.”

Justine Greening, minister for women and equalities said: “We have more women in work, more women-led businesses than ever before. Helping women to reach their full potential isn’t only the right thing to do, it makes good economic sense and is good for British business.”

According to Ed Stacey, the reporting requirements look set to stay and if the government follows the lead of other countries which are further down the track, these requirements may well become more challenging in future years.

There is another transparency initiative released in April to report on payment practice and performance. The duty to report on payment practice and performance will affect individual UK companies and is required within 30 days of each six month period from 6 April 2017.

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